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Patel was the low-cost producer in the motel business - this was his moat. Handing new motels to recently immigrated Patels who can repeat the process. Undercutting his competitors with lower prices.
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See, Papa Patel was fanatical about five things: This process repeats itself until the Patel family owns over half of the motels in America while branching out into luxury hotels, condos, gas stations, convenience stores, and more. He buys another motel and staffs it with other family members who have landed in the United States. Combine that with their extremely frugal lifestyle, and the motel quickly turns profitable.Īfter a few years, Papa Patel now has enough cash to expand his business. Without having to pay for staff (Papa Patel and his wife handle all the work), the Patels have no expenses. It was a low risk, high reward bet.įor a few thousand dollars down payment, Patel buys a motel. If they go broke, Papa Patel and his wife could always bag groceries, work overtime, and save up some money to try again. Plus, he could house his entire family in a few of the rooms, and they could help run the business. Papa Patel realized that with the bank highly motivated to sell a distressed asset, they were willing to finance 80 or 90 percent of the buy price. In other words, the Patels could get into the motel business for very, very cheap. As a result of the recession, hotel occupancy rates were very low, leading to bank foreclosures and fire sales. When money is tight, you skip the vacation. was in a deep recession, and gas prices were very high.